Mbabane: Prime Minister Ambrose Mandvulo Dlamini has noted that the small business community in the country operates predominantly in the wholesale and agricultural sector, with about 40 percent in the wholesale sector and 23 percent in agriculture.
Despite this, the premier said the small business sector has a major role to play towards fulfilling the objectives of the Strategic Roadmap mainly in spurring economic growth, job creation and poverty alleviation. The strategic roadmap is subsequent to the COVID-19 pandemic which nose-dived the world’s economies including that of Eswatini, with a forecast of 1.9 percent fall in Growth Development Product in 2020.
The prime minister said Eswatini appreciates the strategic importance of the MSME sector to the sustainable economic development of the nation and that this is duly reflected in Government’s Vision 2022 – to position the country in the top 10 percent of the medium human development group of countries.
Dlamini said, accordingly, government has developed a National Development Strategy (NDS) that emphasizes the power of the sector to deliver broad-based and inclusive economic growth.
“It is for this reason that we are implementing far reaching reforms to reverse this distribution pattern, which will help to significantly increase the share of high value firms,” said the PM.
The current distribution of firms also suggests the crucial need to strengthen inter-sectoral linkages that will enable MSMEs to join the various value chains and contribute effectively to industrialisation and economic transformation processes, regardless of their primary sector of activity.
The PM said: “His Majesty’s Government, through the Ministry of Commerce, Industry and Trade recently conducted a review of the MSME National Policy whose strategic decision will encapsulate the desire to trigger structural shifts towards an entrepreneurial economy.” The review process was driven by our vision of making MSMEs competitive and of ensuring that the sector becomes the backbone of our economy.
The prime minister mentioned that the primary objective of the revised MSME National Policy is to create a modern, comprehensive, targeted and coherent framework that will create a highly profitable entrepreneurial sector, characterised by innovative, competitive and sustainable businesses, supported by an enabling institutional and regulatory environment. This new Policy framework will help to infuse resilience and productivity to the MSME sector through the emergence of innovative and globally competitive firms for value addition, job creation and sustainable economic growth, said the PM.
The industrialization and transformation of economies through integration can only be achieved through seeking effective ways to involve and empower MSMEs.
“Of course, we must capitalize on our achievements in the region. That also means we must assess the state and progress of our individual strategies and policies. Without any doubt, this is a gradual and continuous process,” said the PM, adding that there is a need to share experiences as well as new developments and prospects.
It is a well-known fact that some of the major constraints that impede MSMEs’ contribution to industrial development require a concerted and cooperative approach, which include issues and challenges like low penetration to regional and global markets, inability of MSMEs to leverage regional value chains, skills – including digital and management skills, and financial and infrastructure constraints, to mention just a few, said the PM. Digital skills are of growing importance as an increasing number of activities and transactions along the value chains are digitized, especially with the advent of the fourth industrial revolution.
The PM reminded that access to financing is one of the major constraints to MSME growth with limited access to credit preventing firms, especially micro-enterprises from capitalising on economic benefits and opportunities, including higher productivity, the opportunity to upgrade to higher value-added production and greater demand for products.
“Here in Eswatini, one of the mechanisms that have been introduced to ease access to finance to MSMEs is the Small-Scale Enterprise Loan Guarantee Scheme, through which businesses are able to obtain a guarantee for a loan up to a certain amount, with government providing a guarantee of about 95 per cent of the loan,” said the premier. He added that the scheme is not perfect, but government is working to improve it to ensure it is more impactful and effective. In fact, said the premier, easing small business access to finance by using alternative and innovative financing schemes is part of government’s Micro Finance Policy, Financial Sector Development Implementation Plan and National Financial Inclusion Strategy.
The PM said government is ready to increase its competitive advantage in Africa and improve the conditions conducive to doing business. Trading across Eswatini’s borders will become easier for investors as government will work to fulfil the goals of government’s Strategic Roadmap 2019-2022, which was initially crafted to push the kingdom into double-digit growth and attract further foreign direct investment. However, said the PM, with the Covid-19 pandemic significantly affecting the global economy, government is now bracing for lower-than-anticipated growth and preparing for recovery. As it stands, government has acknowledged the complaints of potential investors — including procedures that affect and prolong the launch of businesses, delays in securing permits and trading licences, and the high corporate tax rate.